France Inflation

France: Inflation stable in December

January 14, 2014

Consumer prices increased 0.3% over the previous month in December, which was above the flat reading recorded in November and fell slightly short of the 0.4% the market had expected. As the National Statistics Institute (INSEE) reported, the rise in prices was broad-based, with energy registering the largest increases followed by higher prices for transport and communication services.

In December, annual inflation remained at November's 0.7%, matching market expectations. The core inflation index, which excludes more volatile items such as oil, fruit and vegetables, registered a flat reading over the previous month, which was slightly down from the 0.1% tallied in November. Annual core inflation edged down from 0.8% in November to 0.6% in December.

Annual HICP inflation (based on the harmonized index of consumer prices) was stable at November's 0.8%. Meanwhile, annual average HICP inflation inched down from the 1.1% tallied in November to 1.0% in December, which is the lowest rate since June 2010.

FocusEconomics Consensus Forecast panelists expect HICP inflation to average 1.3% in 2014, which is down 0.1 percentage points from last month's forecast. For 2015, panelists project that inflation will remain stable at 1.3%.

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The consumer confidence indicator released by the National Institute of Statistics and Economic Studies (INSEE) rose from 100 points in October to 102 points in November, beating market expectations of an increase to 101 points.

According to the National Institute of Statistics and Economic Studies’ (INSEE) business climate survey on manufacturing activity, the business sentiment index increased from 111 points in October to a ten-year high of 112 points in November.

The IHS Markit flash composite Purchasing Managers’ Index (PMI) jumped from 57.4 points in October to 60.1 points in November, surprising analysts who had expected the indicator to drop to 57.2 points.